Coinbase, the largest US-based cryptocurrency exchange known for its ease of use and attractiveness to mainstream cryptocurrency users, has experienced some controversy as of late over their acquisition of Neutrino, a blockchain analysis startup that traces cryptocurrency transactions.
The Controversy Behind Neutrino
Neutrino was founded in 2016, and is a company based out of Italy that’s led by Giancarlo Russo, Marco Valleri, and Alberto Ornaghi.
The controversy surrounding Neutrino comes largely from the involvement of Valleri and Ornaghi, who before the establishment of Neutrino were executives of Hacking Team, an intelligence firm that sold spyware tools to government agencies around the world.
Hacking Team provided these tools to repressive regimes, including Sudan, Saudi Arabia, and Venezuela, who allegedly violated international laws and used those tools to monitor and endanger political dissidents, journalists, and activists. Essentially, the company put aside their morals and sold spyware and surveillance tools to regimes that perpetrated human rights abuses.
Why Did Coinbase Take Over a Company Like Neutrino?
Coinbase acquired Neutrino on February 19, 2019, which led to an uproar of controversy among cryptocurrency influencers and members in the space. And the question is worth asking: why would Coinbase seek to acquire a company with such unsavory associations as Neutrino?
Kyle Torpey, a full-time crypto writer, took to Twitter to ask Coinbase a series of questions about their acquisition of Neutrino:
I sent @coinbase some questions regarding their controversial acquisition of blockchain analytics firm Neutrino. They didn't answer any of the specific questions, but they sent over this official statement. pic.twitter.com/DFUxWgkvwm
— Kyle Torpey (@kyletorpey) February 26, 2019
Coinbase failed to answer any of Torpey’s specific questions and instead released an official statement, stating that they are aware of the controversy behind the co-founders of Neutrino and do not defend or condone the actions of Hacking Team.
The statement said:
“We are aware that Neutrino’s co-founders previously worked at Hacking Team, which we reviewed as part of our security, technical, and hiring diligence. Coinbase does not condone nor will it defend the actions of Hacking Team. Increasingly, third-party blockchain analysis companies are requesting customer data from cryptocurrency companies that they serve.”
As well, the statement further added that Coinbase is dedicated to protecting its customers’ data and Neutrino’s technology was the best to help them achieve this goal.
“It was important for Coinbase to bring this function in-house to fully control and protect our customers’ data and Neutrino’s technology was the best we encountered in the space to achieve this goal.”
Despite Coinbase’s reasoning behind the acquisition, many cryptocurrency influencers are not impressed, especially since they failed to provide answers to questions asked by the community. Many crypto influencers have since urged users to withdraw their funds from Coinbase and use alternative crypto exchanges.
Do you think Coinbase will lose users over the controversial acquisition of Neutrino? Let us know what you think in the comment section below.